SHARIA-compliant Oasis Crescent Property Fund has entered into a lease agreement with McDonald’s South Africa for a new-build McDonald’s restaurant, McCafe and Drive-Thru to be constructed in KwaZulu-Natal.

Construction of the new McDonald’s site was expected to start during the latter part of the year, "with operations commencing in the first quarter of 2014", the fund said on Tuesday.

Located at the fund’s primary retail property, The Ridge @ Shallcross centre, which is between Chatsworth and Shallcross, the lease will run for an initial period of 10 years with the option for two further 10-year renewal periods.

Oasis Crescent Property Fund, which qualified as a real estate investment trust (Reit) with effect from the start of its current financial year on April 1, was established to provide an alternative to conventional South African property companies and unit trusts for Sharia-compliant investors.

It is managed by Oasis Crescent Property Fund Managers, which is part of Oasis Group Holdings.

The fund said the lease agreement "results in The Ridge @ Shallcross further adding to its food offering, becoming the premium food destination centre within the greater Chatsworth area".

The Ridge @ Shallcross is the largest retail asset in the fund, and Oasis Crescent Property Fund has focused in previous periods on the continued development of the centre.

The fund has reported strong improvements in turnover, trading density and footfall numbers at the centre.

Oasis Crescent Property Fund is among the smallest listed property funds in South Africa. The fund’s property portfolio was valued at R398.4m at the end of March, while its investment portfolio was valued at R285.4m.

For the year ended March, the fund reported its distribution per unit excluding nonpermissible income had decreased by 2.6% to 88.7c, while the fund had delivered a total shareholder return of 10.7%.

The fund said in May it expected trading conditions to "remain competitive in the foreseeable future".

It said at the time it had identified "further potential to increase the income earned on the direct portfolio by maximising the returns on existing assets which will significantly improve the yield for investors".